Walsh Trading Daily Insights
April Lean Hogs is trading under the influence of a bearish engulfing candle pattern. It opened higher and surged to the session high at 106.525. It broke down and plummeted to the low of the day at 104.75. It consolidated the rest of the session and settled at 105.40. Hogs broke out above the 3-day consolidation band with resistance at 104.35 and support at 101.975. It couldn’t quite make to the 106.85 resistance level and it is an area where selling could take over on any weakness in exports which come out before the open on Thursday. It just over a handle away from the February 10th high at 107.70 and don’t forget we are still under the influence of the bearish engulfing candle from the same day. If hogs are strong (strong exports) and we take out the bearish pattern, we could see a test of resistance at 107.925 and then head towards resistance at 109.85. Hogs are still rich to cash and a failure below 104.35 could see prove move towards the 101.975 support level.
The Pork Cutout Index increased and is at 106.34 as of 2/15/2022.
The Lean Hog Index increased and is at 91.84 as of 2/14/2022.
Estimated Slaughter for Wednesday is 478,000, which is above last week’s 472,000 and last year’s 473,000. The weekly estimated total is 1,426,000, which is above last week’s 1,425,000 and last year’s 1,287,000.
March Feeder Cattle opened lower and made the session high at 168.775. I trended lower the remainder of the session, making the low at 166.90 and recovering slightly to settle at 167.45. The breakdown erased all the gains from Tuesday, going below the Tuesday low and support at 167.15. The positive news was it settled above this key level. In my opinion, the breakdown came about as corn reversed course, rallying and closing strong. Feeders are sensitive to the goings on in corn, and could react negatively to corn rallies as feeders are strong to cash and corn at these levels make it expensive to feed cattle. If settlement holds, we could see a re-test of the Tuesday high and then a push to resistance at 169.95. Resistance then comes in at 172.00. A failure below 167.15 could see price work its way down to support at 165.775.
April Live Cattle continued to trade around the key level at 146.825. It opened higher, drifted and then rallied to the session high at 147.70. It turned south quickly and crashed to the session low at 146.175. It recovered and settled at 146.925. Settlement is just above the key level at 146.825 and if it holds, we could revisit the Wednesday high. A rally past the high could see price move towards resistance at 149.375. A breakdown below 146.825 could see price test the rising 21 DMA now at 144.775. The next support level is at 144.025.
Boxed beef cutouts decreased as choice cutouts declined 0.75 to 269.62 and select decreased 1.74 to 266.08. The choice/ select spread widened to 3.54 and the load count was 111.
Wednesday’s estimated slaughter is 122,000, which is even with last week and above last year’s 100,000. The estimated total for the week is 366,000, which is above last week’s 365,000 and last year’s 269,000.
The USDA report LM_Ct131 states: So far for Wednesday in the Southern Plains negotiated cash trading has been moderate to active with good demand. Compared to last week live purchases traded 2.00 higher at 142.00. In Nebraska and Western Cornbelt negotiated cash trading has been slow with light to moderate demand. In Nebraska a few live purchases ranged from 142.00-143.00 and a few dressed at 226.00. In the Western Cornbelt a few live purchases ranged from 141.00-143.00. However, not enough purchases in either region for a full market trend. Last week in Nebraska live and dressed purchases traded at 140.00 and 224.00, respectively. For the prior week in the Western Cornbelt live and dressed purchases traded from 140.00-142.00 and at 224.00, respectively.
The USDA is indicating cash trades for live cattle from 140.00 – 143.00 and from 224.00 – 226.00 on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, February 17, 2022 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Senior Market Strategist
Walsh Trading, Inc.
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